Share the Wealth Corporate America—Share it with us!

By

Richard W. Crockett

The USA is the most prosperous country in the world, but for whom? The claim is an expression that we frequently echo, and it is the way we like to think of ourselves. But is it true, or is the conventional wisdom out of date. And if so, what will it take to fix it?

It used to be accepted as true, that if a government engaged in deficit spending, it would provide an economic stimulus because it would flood the economy with cash. The dollar would “turn over” at least six times. Even the Chamber of Commerce preached this doctrine. This “turn over” was known as the multiplier affect and sometimes the “domestic multiplier” affect. But the president’s economic policy has put the lie to that thought. The administration of President Bush has managed to create record deficits by dumping dollars overseas through foreign adventure and so called “free” trade. No domestic multiplier here. President Bush has become something of a Keynesian, a follower of John Maynard Keynes, a British economist of the first half of the twentieth century. He readily signs on to the benefit of deficit spending, which Keynes advocated for depressed economies, but the President approaches it from a supply-side perspective. Trickle down, if you will. Well, it doesn’t seem to trickle.

Not all Republicans agree with President Bush’s strategy, but some of them are even worse. John McCain agrees with Bush that we need to reduce corporate taxes but thinks that we need to curb governmental spending as we approach a deepening recession. He is talking about continuing expenditures on our overseas belligerency, but cutting domestic spending. That sounds very much like what Herbert Hoover thought was needed to correct the crash of 1929, except that he was less belligerent than Bush and McCain. Of course it failed miserably and elected Franklin D. Roosevelt to the Presidency. Rudy Giuliani advocates not replacing “one half of the federal employees coming up for retirement.” What an economic stimulus that would be! Do you think it would really help out? It might make us feel better, but I doubt that it would help the economy. These two gentlemen have confused fixing the government with fixing the economy, and it is not likely that it will do either.

Another approach, which confuses fixing the government with fixing the economy, is that of Mike Huckabee and Ron Paul. Neither of them likes the IRS, so they have a lot of company in this view. Huckabee advocates a “fair tax,” which translates into a 23% consumption tax (think sales tax), and in return the plan would abolish the IRS. Hurrah! But think about this. The next time you buy a new car with a twenty five thousand dollar window sticker, you would need to pony up $5750, not counting the state sales tax, in federal sales tax for your self-indulgence. How is that for an economic stimulus? The other well-known problem of the sales tax is that it discriminates against people who have no discretionary income. If a couple uses all of their income for food, housing, clothing, and fuel, and many people are in this predicament, when they purchase necessities of life, they are taxed most severely and on every penny of it. No tax refund here, either. But if you have an income of one million dollars per year, much of it goes untaxed because you either salt it away or invest it in some kind of investment vehicle, which according to the Huckabee plan would not be taxed. Sounds a little like a reverse Robin Hood scheme of stealing from the poor and giving to the rich!

If there is a need to lift the burden of taxes from the American people, we do need to consider alternatives. One such source of revenue is a tax on imports, and in the case of so-called American companies who have closed plants and shipped jobs overseas, it should be an especially punitive tax. Let them pay for their unfaithfulness. Oh, I grant that the companies would transfer this to consumers in the price of their goods, but that is the point after all—to make these products less competitive with domestically manufactured American products in order to create American jobs. The price advantage gained against foreign imports could aid in the return of jobs and manufacturing to this country. The Japanese car companies already have built plants in this country, so it can be done. If we faced a temporary inflation in the price of goods, it would at least support the American economy rather that that of China, India and Bangladesh.

Huckabee is correct about one thing, and this is where he parts company from his Republican brethren. He recognizes the value of public works and public education investment for the country for its long-term benefit to the economy. In my opinion, this is a correct view because during the construction phase of public works, it is money paid to local people for local wages, in turn spent in this country, and this kind of expenditure has a domestic multiplier. Further this position recognizes an economic stimulus cannot consist of a one-time shot in the economic arm, hoping for a permanent fix, but which quickly returns to a staggering economic insobriety.

A point shared by all of the Republican candidates is in their belief in the popular myth, that government is always inherently bad, and we need to dismantle if not abolish it. OK, it is time for a reality check. What has the lack of government got for us lately? A powerful case can be made that we needed a strong, competent government to respond to the Katrina disaster and to respond to the unchecked invasion of immigrants across our southern border. The country needs a competent Federal Emergency Management Administration, which we did not have with the Katrina disaster, and a substantial border patrol, which we have not had for several years. These are government jobs with decent retirements. You will never get this from a set of interests, which hates the government and is dedicated to the proposition favoring its reduction or elimination. Instead, what is needed is leadership that is respectful of the institutions of government and dedicated to the proposition that it can be made to work. This will mean that we need to change the interests, which hold sway over the government.

Does America want a continuation of an economy being run by overpriced corporate executives where business failure produces “golden parachutes” in severance packages upon their being fired and Washington lobbyists bribing our elected officials with campaign contributions, or would you rather have an economy that serves the interests of ordinary people? Further Enron-ization of the economy is undesirable. Republican economics is economics by and for the rich and corporate interests, and dedicated to the proposition that opportunity for the small entrepreneur, the middle class and the ordinary worker is to be systematically abolished in the name of free enterprise, but understood by the abolishers as capitalism and as being in the interest of profit. But if profit is a moral “good,” then how about profiting the ordinary people and workers for their work?

How long do we want to worship at the shrine of corporatism, in the name of free enterprise? Corporate capitalism is not the same thing as free enterprise—it can become what Benito Mussolini called a corporate state, a sort of benign fascism, not killing people, but merely stealing from them and not merely stealing money, but also stealing political power and ultimately democracy.

1/31/08